Justine collects vintage comic books. When prices for all other goods are fixed at current levels, her demand function for original superman comic books is S = .02m – 2p. In this equation, m is her income, p is the price of superman comics and S is the quantity of Superman comics she demands. Let her income equal $7,500 and the price of a comic is $30.
a. How many Superman comic books will Justine buy?
b. If the price of comic books increases to $40, how much income would Justine need to afford the same number of comic books and the same amount of other goods she had before the price change?
c. At the income from part (b) and a price of $40, how many comic books would Justine buy?
d. At the original income of $7500 and a price of 40, how many comic books would Justine demand?
e. When the price rose from $30 to $40, how much did demand decrease by?
f. The substitution effect (increased/decreased) (circle one) her demand by ______ books. g. The income effect (increased/decreased) her demand by _____ book